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IN LABOUR APPEAL COURT OF SOUTH AFRICA HELD AT JOHANNESBURG
CASE NO: CA5/2007
In the matter between: SOUTH AFRICAN MUNICIPAL WORKERS 1st APPELLANT UNION (SAMWU) AA EWERTS & 16 OTHERS 2nd to 18th APPELLANTS and KANNALAND MUNICIPALITY RESPONDENT
 This is an appeal from a judgment of Nel AJ sitting in the Labour Court
in a trial relating to a dismissal dispute between the appellants and the
respondent. The first appellants contended that the second to
eighteenth appellants (the individual employees) who were all
members of the first appellant, a representative trade union
(SAMWU), were unfairly dismissed by the respondent on 30
November 2004. The respondent on the other hand, contended that
the dismissal of the individual employees was based on its operational
requirements and was fair.
 The dispute concerning the fairness of their dismissal was referred to
the South African Local Bargaining Council-Western Cape (the
Bargaining Council). The dispute remained unresolved as at 27
November 2004 and a certificate to that effect was issued by the
Bargaining Council on 5 December 2004. The matter was referred to
the Labour Court for adjudication.
 It is perhaps apposite to state that the matter was heard by the
Labour Court from 11 to 15 September 2006. Only the respondent
tendered oral evidence.
 The Labour Court gave its judgment on 23 January 2007. The Labour
Court found that the dismissal of the individual employees was
substantively fair but procedurally unfair. Although the Labour Court
found the dismissal to be procedurally unfair, it made no order for
compensation and costs.
 Aggrieved by that part of the order of the Labour Court relating to the
substantive fairness of the dismissal and failure to make an order for
compensation and costs, the appellants applied for leave to appeal
against the whole of the judgment of the Labour Court. Leave was
granted on 28 May 2007.
 The following facts are either common cause or not in dispute. The
respondent is a municipality established in terms of the Local
Government: Municipal Structures Act 117 of 1998 (the Structures
Act). The process of establishing the respondent involved the
amalgamation of several municipalities, namely Ladysmith, Calitzdorp,
Zoar and Van Wyksdorp.
 During 2003, representatives of the South African Local Government
Association (SALGA) (of which the respondent is a member), the first
appellant as well as its sister trade union, the Independent Municipal
and Allied Trade Union (IMATU) entered into a collective agreement
termed the Organisational Rights Agreement ("the ORA") under the
auspices of the Bargaining Council. The ORA sought to regulate inter
alia, the organisational rights afforded to the trade unions, the conduct
of collective bargaining and the resolution of disputes at national level.
The agreement was binding on all municipalities affiliated to SALGA.
 Clause 7 of the ORA made provision for the establishment of Local
Labour Forums at each workplace. The workplaces in this instance
were the member municipalities. Such fora were compulsory dispute
resolution bodies at the workplaces. Disputes could be referred by
either the trade unions or municipalities to these fora. It is important
to note that the Local Labour Forums were not empowered to deal with
matters that are bargained at national and provincial forums. Their
powers and scope were only limited to matters relating to the work
places and which were not the subject of bargaining at either national
and or provincial level.
 During December 2002 SALGA, SAMWU and IMATU entered into a
collective agreement which was commonly known as the Placement
Agreement. Clause 3 of the Placement Agreement required each new
municipality to prepare final organograms of all departments and to
submit it to the Local Labour Forums for consultation prior to their
finalisation by the Councils of the municipalities. Should such
consultation at the Local Labour Forums fail to reach consensus, the
concerned municipality had the right to unilaterally adopt and
implement the aforesaid new organogram.
Following its amalgamation, the respondent produced an organogram
containing the proposed structure for the municipality as envisaged by
the Placement Agreement. This organogram was consulted on in the
Local Labour Forum and agreement was reached. Placements in terms
of the organogram were subsequently effected. The date when the
agreement on the organogram and when it was subsequently
implemented are not provided. However, nothing turns on the said
dates safe to note that the respondent had complied with the
Placement Agreement by submitting the final organograms to the
Local Labour Forum for consultation and an agreement was reached.
During March 2004 an organisation known as Zader Municipal Services
was tasked with investigating the parlous financial state of the
respondent. Out of this exercise a report dated 23 March 2004 known
as the Zader Report was produced. The report made certain
proposals that included a new organogram for the municipality. The
report stated inter alia that the new organogram had been drawn up in
conjunction with the Municipal Manager and Heads of Departments of
the respondent; that there had not been consultation at the Local
Labour Forum and that the consultation process be completed once the
Local Labour Forum had been reconstituted and its powers defined. It
is important to note that the new organogram had the effect of
rendering at least 28 employees redundant as they would not be
catered for in the budget of the respondent.
During the course of the year 2004 the Member of the Executive
Council (MEC) responsible for Local Government and Housing in the
Western Cape Province, acting in terms of Section 106 of the Local
Government: Municipal Systems Act No: 32 of 2000, (the Systems
Act) appointed L A Dekker (Dekker) and Oppelt to conduct an
investigation into the affairs of the respondent. There were at that
time serious allegations of maladministration at the respondent.
Dekker testified that he is an attorney specialising in Labour Law and
Municipal Law. He had been in the municipal field for about thirty
years and also ten years doing Labour matters. The investigating team
produced a report on its activities dated 16 April 2004. This report
became known as the Dekker Report. All relevant stakeholders
including the trade unions, councillors, officials and members of the
public participated in the process. Dr Kaap whose entity produced the
Zader Report also made a presentation to the investigating team.
Dekker and Oppelts brief were to investigate alleged
maladministration and allegations concerning corrupt activities that
were taking place at the respondent. The investigators were to gather
evidence, make findings and recommendations to the MEC. The
following are some of the findings of the investigation relevant to this
13.1 It was found that the recommendation that was made by a
certain municipal finance official who was appointed to assist the
respondent during 2002 about ways to deal with the
respondents financial deficit were not as yet implemented by
13.2 Zader Report had established that the income of the respondent
was below than what was budgeted for, and that there had been
personnel appointed without being budgeted for. The team then
prepared a financial recovery plan that was adopted by the
respondent and approved by the MEC. This plan had also not
13.3 Loans and overdrafts were not being repaid;
13.4 Politicians at the respondent were involved in appointing staff.
Through this unauthorised process they improperly appointed
their family members and relatives;
13.5 Staff appointments were made outside the policy framework of
the respondent. The municipal manager was contrary to policy
framework not involved in the appointment process. The staff
policy framework was only one page and proved inadequate;
13.6 Post levels were not allocated and job descriptions were
incomplete. A glaring example is that of a general labourer at
the cemetery at post level 14, who was rewarded by being
elevated eleven notches up to the position of internal auditor by
the Mayor after he testified in the mayors defence at a rape
trial. Unsurprisingly, the appointee did not have the necessary
qualifications and experience of internal auditor position;
13.7 There were irregular and ad hoc upgrading of post levels without
changing the content of the post or providing reasons for such
13.8 Appointments, promotions and upgrading of posts were done by
the Local Labour Forum and submitted to the Executive Mayoral